By Junaid Khan
Growboo
ISTANBUL – Turkey has announced the end of its costly foreign exchange-protected deposit program, a controversial policy estimated to have drained around $60 billion since its launch in late 2021. The move marks another step by policymakers to dismantle unorthodox economic measures that previously fueled a sharp lira crisis.
The central bank said on Friday that as of August 23, no new accounts or renewals will be allowed under the scheme. Existing accounts, however, will remain valid until their original maturity. Alongside the decision, the bank also adjusted rules related to reserve requirement remuneration and commissions linked to the program.
From peak to near phase-out
The FX-protected deposit system, known as KKM, was initially introduced to shield households and businesses from currency depreciation by guaranteeing compensation for exchange rate losses.
But the lira has suffered steep declines in recent years—dropping 44% in 2021, 29% in 2022, 37% in 2023, and 16% in 2024. As the scheme became increasingly expensive, its size has shrunk dramatically: from a peak of $140 billion in deposits to just $11 billion today.
Turkish officials had earlier signaled the scheme would be phased out by the end of 2025, but Friday’s announcement accelerates that timeline.
